Daily Chartbook #103

Welcome back to Daily Chartbook: macro market charts, data, and insights pulled from various sources around the Internet by a solo retail investor.

1. Fed underestimates unemployment. "According to TS Lombard the bad news is they actually do a decent job at spotting cyclical peaks, but the more worrying news is that they always underestimate the severity of recessions".

2. Small biz. "Small Business Optimism Index up to 91.9 vs. 90.5 est. & 91.3 prior … outlook turned lower and plans to increase inventory dipped into net negative territory … capex expectations nudged up a bit".

3. Biggest tail risk. "Inflation staying high remains the biggest tail risk".

4. Peak inflation. "Record net 90% think that global inflation will be lower within the next 12 months... FMS investors expect US CPI inflation to be 4.2% in the next 12 months".

5. CPI (I). "Improvements for November CPI inflation in m/m terms … headline +0.1% vs. +0.3% est. & +0.4% prior … core +0.2% vs. +0.3% est. & +0.3% prior".

6. CPI (II). Month-over-month change in headline CPI including topline contributions.

7. CPI (III). Month-over-month change in core CPI including topline contributions.

8. CPI (IV). Year over year CPI inflation came in "at 7.1% y/y vs. 7.3% est. & 7.7% prior … core 6% y/y vs. 6.1% est. & 6.3% prior".

9. CPI (V). "Oil up most, followed by airfares; used cars/trucks only category in negative territory".

10. Real wages. "Real wages for Americans fell for the 20th straight month".

11. Rate path. "Big shift investors' expectations for the Fed's rate path from yesterday (blue) to today (yellow)".

12. Weak liquidity. "Without market liquidity there is a risk of magnified moves in either direction.  Notice that liquidity collapses when the Fed intervenes in the market".

13. Dollar down. "U.S. dollar falling further below its 200-day moving average this morning (with its 50-dma and 100-dma converging)".

14. Put/call ratio vs VIX. "Still a yawning gap between spike in equity put/call ratio (blue) and relatively tame VIX (orange) this year (20-day averages shown for both; note different axes)".

15. Volatility. "Rate Vol has picked up sharply but FX and equities are blissfully ignorant".

16. Market Stability Risks. "The FMS Financial Market Stability Risks Indicator eased from 8.5 to 5.6...turning point for risk aversion".

17. Risk appetite. Fund manager "risk appetite starting to recover".

18. Peak cash. "BofA’s fund manager survey shows cash levels peaking".

19. Sentiment indicators (I). "Low if you have a 15-year horizon. At the upper end of the range if you have a 2022 horizon".

20. Sentiment indicators (II). "Morgan Stanley's market sentiment indicator has just rolled back into negative sentiment. Wilson and his team have been spot on and he "faded" his latest squeeze call last week".

21. 2023 best performers. "Investors expect government bonds to be the best performing asset in 2023".

22. Stocks vs. bonds. "Fund managers most overweight bonds vs stocks since April 2009".

23. Balance sheet top priority. "Respondents overwhelmingly desire firms to improve balance sheets rather than prefer executives invest in capital projects or return cash to shareholders".

24. Investor flows. "Investors continue to move away from risk as large-/mid-cap equity ETFs have commanded only ~30% of inflows over past month ... some interest in government bond funds has come back ".

25. Mutual fund outflows. With equity mutual fund outflows in 39 out of the last 40 weeks, "this pace is rivaled only by Oct 2008 (financial crisis), Dec 2018 (trade wars + Fed hike into slowing economy leading to worst December since 1931), and Oct 2020(Trump/Biden election)".

26. Small trader put buying. "These puts are in BIG trouble".

27. All or nothing. "All the net gains in the S&P 500 over the past 2+ decades have come when 9 or more OR 1 or fewer sectors are above their 200-day average".

28. Equities drivers. Shareholder returns are seen as the only factor driving equity gains in December.

29. Overestimated. "Based on yesterday’s closing price of 3,963.51, analysts overestimated the price of the index by 33% at the start of CY 2022 as of yesterday".

30. S&P 2023 forecast. And finally, “industry analysts in aggregate predict the S&P 500 will have a closing price of 4,493.50 in 12 months”.

Thanks for reading!